CHAPTER 9 Immigrant Entrepreneurship: Drivers, Economic … · 2018-05-17 · Fraser Institute Th 364 d Demographics and Entrepreneurship: Mitigating the Effects of an Aging Population

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CHAPTER 9 Immigrant Entrepreneurship: Drivers, Economic Effects, and Policy Implications Peter Vandor and Nikolaus Franke Vienna University of Economics and Business

Introduction

Immigrant entrepreneurs are a considerable economic force in many countries, creating innovation, employment, and welfare. Andrew Carn-egie, Sergey Brin (Google), Mike Lazardis (RIM), and John Molson (Mol-son Brewery) are vivid and well-known examples of this phenomenon, but the evidence goes beyond anecdotes. In many countries, immigrants are more likely to become entrepreneurs than the native population, and companies founded by immigrants in the United States, for example, generated $52 billion in revenue and created 450,000 jobs between 1995 and 2005 (Wadhwa 2009).

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364 d Demographics and Entrepreneurship: Mitigating the Effects of an Aging Population

The relevance of immigrant entrepreneurship1 as a topic of discourse has clearly increased in recent years. The first reason is that international migration has become more frequent. In 2015, an estimated 244 million people were living outside their country of birth—more than half of them in G20 countries (OECD, 2017). Net migration added about 10 million people to the total population in G20 countries between 2010 and 2015, with an estimated 3.3 percent of the total G20 population consisting of immigrants. At the same time, public and political opinion on immigra-tion has shifted dramatically towards a more negative assessment of im-migrants and their economic and social role in society. In many countries, populist and nativist political parties such as the German AfD party, the French Front National, or the Austrian Freedom Party, and individual poli-ticians such as Netherland’s Geert Wilders, Hungary’s Victor Orban, and the President of the United States, Donald Trump have portrayed immi-gration as a threat and promoted highly restrictive immigration policies.

Against this background, there is a clear need for an objective and evi-dence-based analysis of the phenomenon of immigrant entrepreneurship, its drivers and its economic effects. This chapter is our modest attempt to provide such an overview, based on state-of-the-art research into immi-grant entrepreneurship. We first discuss the major theories on immigrant entrepreneurship and their reasoning for why immigrants are more in-clined to become entrepreneurs than are native-born citizens. These driv-ers include contextual variables as well as differences in the distribution of individual characteristics (Section 2). Subsequently, we turn our attention to moderators of these relationships, which may help explain varying rates of self-employment among immigrants in different countries (Section 3). Eventually, we discuss the economic and social effects of immigrant entre-

1 In line with much of the literature, we understand immigrant entrepreneurship as self-

employment and business foundations of individuals who have immigrated into a country.

The phenomenon has also been discussed under the labels of “ethnic entrepreneurship” and

“minority entrepreneurship”, highlighting that many immigrants are also from an ethnic

minority (Levie, 2007; Zhou, 2004).

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Immigrant Entrepreneurship: Drivers, Economic Effects, and Policy Implications d 365

preneurship (Section 4) and policy implications in countries of origin and recipient countries (Section 5).

1. The phenomenon of immigrant entrepreneurship

While the integration of immigrants is at times perceived as a cost factor in public discourse, many researchers have made the case for mixed or predominantly positive effects of immigration on host societies and econ-omies. They highlight the role of immigrants as net contributors to the social security system, the favorable demographic effects of immigration in aging societies, and the stimulation of economic growth and innovation (e.g., Eryadin et al., 2010; Kerr and Kerr, 2011; Ottaviano and Peri, 2006). Immigrant entrepreneurs play one particularly positive role. By pursu-ing careers as entrepreneurs, many immigrants can successfully create income for themselves and their families. In addition, they create novel product and service offers for consumers, and employment opportuni-ties (see Section 4).

One of the reasons for the ongoing scholarly interest in immigrant en-trepreneurship is its surprising frequency. Upon arriving in a country, im-migrants face many barriers, which would suggest entrepreneurship is a rather unlikely career choice. In comparison with natives, migrants may often lack language skills, resources, and knowledge about the market in which they operate. Under ceteris paribus conditions, one might therefore expect that such a clear resource disadvantage against natives would lead to significantly less entrepreneurial engagement.

Evidence has suggested otherwise, however. In many countries, im-migrants are as entrepreneurial as natives, or are even overrepresented among entrepreneurs. Self-employment is higher among the foreign-born in many developed economies, such as the United States, Canada, the United Kingdom, and Germany (Borjas, 1986; Clark and Drinkwater, 2000; Hohn, 2012; Fairlie et al., 2010; Levie, 2007; Metzger, 2014; Portes and Zhou, 1996; Schuetze and Antecol, 2006). In the United States, immi-grants represented 24.9 percent of all new business owners between 2007



and 2011, but only 15.6 percent of the wage workforce.2 In 2015, the new business formation rate per month was almost twice as high among im-migrants (0.51 percent) as among the population born in the United States (0.28 percent; see Fairlie and Lofstrom, 2015). Similar observations have been made for Canada. For example, data from the 2009 Labour Force Survey indicates that 17.5 percent of immigrants aged 18 to 69 were self-employed, compared to only 14.4 percent of the Canadian-born popula-tion (Green et al., 2016).

Insights from the Global Entrepreneurship Monitor (Xavier et al., 2013) further underscore the global scale of this phenomenon: the major-ity of the countries surveyed report higher entrepreneurial activity among first-generation immigrants than among natives. Self-employment data from the OECD/European Union (2015) paints a similar picture. Across OECD countries and the EU, immigrants are more likely to be self-em-ployed. While their engagement varies strongly, immigrant self-employ-ment reaches largely similar levels as native self-employment in 4, and higher levels in 21 out of 35 surveyed countries (table 1). In nine countries, including Canada, the United Kingdom, Hungary, and Poland, immigrants are more than 20 percent more likely to become self-employed than the native population.

The relatively strong inclination of immigrants to become entrepre-neurs is not a new phenomenon. Historians have documented the eco-nomic impact of immigrant entrepreneurs in different countries and time periods. Jewish immigrants constituted a significant share of successful entrepreneurs in the United Kingdom between the 1930s and 1950s. These mostly Lithuanian and Polish immigrants have left their mark in many in-dustries, creating household names such as Marks and Spencer or the food retail giant Tesco by introducing product and financial innovation (Godley and Casson, 2010). An analysis of entrepreneurs in New Zealand between 1840 and 1900 suggests that almost 90 percent of all businesses had been

2 Applying a broader definition, Kerr and Kerr (2016) find that roughly 35 percent of

businesses in the United States have at least one immigrant co-founder.



Table 1: Percent of Workers in Self-Employment

Foreign-born Native-born Difference

Lithuania 6.1% 6.8% -0.7%

Iceland 6.1% 11.2% -5.0%Norway 6.3% 5.2% 1.1%Latvia 7.4% 8.3% -0.9%Luxembourg 8.0% 6.3% 1.7%Estonia 8.3% 8.2% 0.2%Switzerland 9.0% 11.7% -2.7%Denmark 9.1% 7.2% 1.9%Austria 9.3% 8.6% 0.7%Israel 9.3% 11.9% -2.6%Cyprus 9.4% 15.3% -5.9%Sweden 9.5% 8.4% 1.1%Australia 9.6% 8.7% 0.9%Ireland 10.3% 13.0% -2.7%Slovenia 10.4% 9.4% 1.0%Germany 10.6% 9.7% 0.8%United States 11.0% 8.7% 2.3%France 11.0% 9.0% 2.0%Finland 11.5% 10.3% 1.3%OECD total (30) 12.0% 11.6% 0.4%New Zealand 12.1% 12.8% -0.6%Greece 12.2% 26.8% -14.5%

Malta 12.4% 12.5% -0.1%

EU total (28) 12.9% 12.7% 0.2%

Croatia 13.3% 9.8% 3.5%

Portugal 13.3% 13.4% 0.0%

Hungary 13.7% 9.6% 4.2%

Belgium 14.3% 12.5% 1.8%

Turkey 14.4% 17.3% -2.9%

Italy 14.6% 22.8% -8.2%

Netherlands 14.8% 13.6% 1.1%

Spain 14.9% 15.9% -1.1%

United Kingdom 16.0% 12.7% 3.4%

Canada 16.4% 12.7% 3.7%

Slovak Republic 17.1% 15.3% 1.8%

Czech Republic 26.6% 16.5% 10.1%

Poland 29.0% 12.0% 17.1%

Source: OECD/European Union, 2015; data for foreign-born and native-born self-employed workers

aged between 15-64 years. Data collection: 2012-13.



founded by immigrants, while immigrants only represented 54 percent of the population of New Zealand at that time (Hunter and Wilson, 2007).

Over the last five decades, the entrepreneurial activity of immigrants has increasingly raised interest in the research community, leading to in-quiries into the degree, reasons, and moderating factors of immigrants’ overrepresentation among entrepreneurs, as well as its impact on society. Literature reviews of the field have identified a substantial body of research on the subject. Depending on data source and scope of analysis, estimates range from a few dozen peer-reviewed core papers (Aliaga-Isla and Rialp, 2011; Ilhan-Nas et al., 2011; Ma et al., 2013) to up to 1,700 journal articles, book chapters, and newspaper articles related to the topic (Kloosterman and Rath, 2003). Much of the work on immigrant entrepreneurship can be found in sociology and economics and a smaller share in geographical and small business outlets (Ilhan-Nas et al., 2011; Ma et al., 2013). Interest-ingly, the topic had been rather absent in the most influential journals in entrepreneurship and management until rather recently, when immigrant entrepreneurship began to be associated with the field of international en-trepreneurship (Jones et al., 2011).3

2. Drivers of immigrant entrepreneurship

One of the major questions that research into immigrant entrepreneurship is trying to answer is why immigrants are more likely than the native-born population to become entrepreneurs. The reasons can be grouped into context-level drivers, i.e., reasons rooted in the characteristics of the host country, and individual-level drivers, i.e., reasons rooted in characteristics of the individual immigrant.

3 For example, a Google Scholar search in the Journal of Business Venturing produces

only 19 entries for “immigrant entrepreneurship” or “ethnic entrepreneurship,” of which

17 have been published in the last 10 years.



Context-level drivers Context-level approaches argue that immigrants’ entrepreneurial activity is particularly fostered by discrimination in the labor market and the role of ethnic enclaves and communities.

Blocked mobility: In many countries, immigrants are subject to xenopho-bia and discrimination in the labor market (Aldrich and Waldinger, 1990; Bonacich, 1972; Jones et al., 2014; Kim et al., 1989; Light, 1972; Naudé et al., 2015). Experiments in Canada have demonstrated that applicants with Chinese, Indian, or Pakistani sounding names but otherwise similar edu-cation and work experience had to send 40 percent more applications to be invited to a job interview than job seekers with “typical” English names (Oreopoulos and Dechief, 2014). Schneider et al. (2014) identify seventeen studies reporting such forms of racial discrimination in a total of 11 Euro-pean countries. Immigrants also encounter other barriers to entering the labor market, including a lack of language skills, the non-recognition of overseas credentials, and unfamiliarity with the social, economic, and legal structure of the host society (Bonacich, 1993; Kim et al., 1989).

Setting up a business can thus be a rational reaction to lower chances on the labor market and the thereby blocked upward mobility. It allows immigrants to put their skills and knowledge to adequate use, when they are not recognized or accepted by the labor market (Clark and Drinkwater, 1998; Light et al., 1994; Portes and Zhou, 1996; Sanders and Nee, 1996; Wong, 1988).

This hypothesis has also been referred to as the “middleman minor-ity” paradigm, pointing to the historical discrimination against some mi-norities who would then take roles as “middlemen” between other market actors. Being excluded from the right to participate in production, land-ownership, or even the right to enter cities, minorities, such as the Jews in Europe or the Chinese in Southeast Asia, turned to self-employment in less well-regarded occupations such as trade or money-lending (Bonacich, 1973; Wong, 1988).

Findings of Constant and Zimmermann (2006) offer empirical support for the blocked mobility hypothesis. In a survey of Turkish immigrants in



Germany, they find that immigrants who felt discriminated against were 46 percent more likely to become self-employed than immigrants who did not feel discriminated against. Beaujot et al. (1994) also found support for the blocked mobility hypothesis in 1986 Canadian census data. Similarly, analyses from Sweden (Hammarstedt, 2006) and the United States (Raij-man and Tienda, 2000) confirm this finding.

In sum, this suggests that labor-market discrimination is a considerable push factor into immigrant self-employment.

Ethnic enclaves: Another contributor to immigrant entrepreneurship is the residential concentration of co-nationals and co-ethnics in specific urban areas. Early sociological research on immigrant entrepreneurship has emphasized the role of such “enclaves” and communities in fostering entrepreneurship among immigrants (Bonacich, 1973; Light and Bonacich, 1988; Aldrich and Waldinger, 1990; Wilson and Portes, 1980). Ethnic en-claves facilitate access to various resources that can support the develop-ment of a business, including financial capital, social capital, and knowl-edge (Almeida et al., 2014; Portes and Zhou, 1992).

Waldinger and Aldrich (1990) further argue that enclaves create par-ticular opportunity structures that are favorable for immigrant entre-preneurs. First, enclaves provide markets with distinct demands, e.g., for ethnic goods. Opportunities in these markets can be best recognized by individuals with insight into the specific customer needs and preferences of an ethnic or national group (Borjas and Bronars, 1989; Waldinger and Aldrich, 1990). Second, an enclave often also provides access to special-ized means of production to exploit these opportunities (e.g., trained labor, raw material, complementary goods). Thus, immigrant entrepreneurs can more easily identify and exploit business opportunities in an area with in-habitants of similar ethnic origin (Waldinger and Aldrich, 1990; Wilson and Portes, 1980).

Language plays an important role in the opportunity structure of en-claves for potential entrepreneurs. The option to speak the language of the country of origin allows newly arrived immigrants to engage in entrepre-neurial activity immediately, even if they lack good command of the host



country language. At the same time, the language distance between ethnic enclaves and the majority population can also serve as an entry barrier for non-ethnic businesses, which helps to protect the market from native competition (Evans, 1989; Light, 1972).

Empirical evidence on the effect of ethnic enclaves on self-employment is mixed but predominantly positive. It has been supported by a number of empirical studies in Canada (Razin and Langlois, 1996; Teixeira, 2001), the United States (Borjas, 1986; Fairlie and Woodruff, 2007; Portes and Zhou, 1999; Wilson and Portes, 1980), Australia (Evans, 1989), and Sweden (An-dersson and Hammarstedt, 2015). Hum (2001), Min (1988), and Salaff et al. (2003) further support its theoretical underpinnings by showing that entrepreneurs in an ethnic enclave indeed tend to hire co-ethnics. More recently, Almeida et al. (2014) also found a positive effect of moderate community engagement of Indian immigrant inventors in the Californian semiconductor industry on their innovation output.

However, the findings of Boyd (1990), Borjas (1986), Fairchild (2009), Clark and Drinkwater (2000), and Razin and Langlois (1996) show that the effect of enclaves on immigrant entrepreneurship may differ between ethnic groups, or may in some cases not come into effect at all. Aldrich and Waldinger (1990), Yuengert (1995), and Bager and Rezaei (2001) find no effect of ethnic enclaves on entrepreneurial activity, and Clark and Drink-water (2002) even identify a negative effect of living in ethnic enclaves in England and Wales. This suggests that, in spite of the benefits, there may also be some barriers to starting a business in ethnic enclaves.

Waldinger and Aldrich (1990) point out that opportunities in ethnic markets tend to be limited in scale and often lack long-term growth po-tential. In addition, the opportunity structure in enclaves forces entrepre-neurs to choose from a rather restricted set of business ideas and indus-tries, which can create “cannibalistic competition” between immigrant entrepreneurs (Light and Gold, 2000: 127). The findings of Andersson and Hammarstedt (2015) on self-employment of immigrants from the Middle East in Sweden support that notion. While finding positive effects of the presence of enclaves on the likelihood of self-employment, the authors found a negative effect of ethnic network size, suggesting that a density of



entrepreneurs from one country of origin may create too much competi-tion for a limited opportunity space (Ram et al., 2008).

In sum, this suggests that ethnic enclaves explain some specific forms of immigrant self-employment but may not always contribute to the devel-opment of entrepreneurship with long-term growth potential.

Ethnic social networks: Many authors emphasize that immigrant en-trepreneurs benefit from being embedded in networks of ethnicity and kinship (Greene and Butler, 1996; Sanders and Nee, 1996; Portes and Sensenbrenner, 1993). These networks provide access to valuable resourc-es, including cheap labor from co-ethnic and family sources or funding from family members and rotating credit associations (Bird and Wenn-berg, 2016; Portes and Bach 1985; Portes and Sensenbrenner, 1993). In fact, as Greene and Butler (1996) have pointed out, ethnic social networks often serve as “natural business incubators” for immigrant entrepreneurs by providing training, assistance in the identification of entrepreneurial opportunities, business intelligence, and seed funding (Granovetter, 2010; Greene and Butler, 1996; Ley, 2006).

While the social networks of immigrants are often analyzed within the context of enclaves, they do not necessarily need to be co-located in one physical area. In fact, the social networks of immigrant entrepreneurs can be dispersed across a country (Hum, 2001; Waldinger, 1990). Moreover, many immigrants have access to valuable transnational networks in their country of origin, which facilitates doing business on an international scale (Rusinovic, 2008; Neville et al., 2014). In the case of the Netherlands, Rusi-novic (2008) shows that a considerable number of immigrant entrepre-neurs makes use of transnational networks as resources in their businesses.

The social networks of immigrants are argued to be particularly strong within minority groups and are supported by what Portes and Zhou (1992) describe as “bounded solidarity” and “enforceable trust.” As expressions of solidarity, many immigrants develop a consistent pref-erence for goods and services associated with their country of origin, both for their intrinsic utility and as symbolic representations. Likewise, workers and investors might prefer to work among and with “their own”



(Portes and Zhou, 1992). This solidarity is intertwined with what Portes and Zhou (1992) call “enforceable trust,” describing the power structures in communities. The tight social structures of immigrant communities allow for controlling and sanctioning violators of commonly accepted norms and community interests.4

Empirical evidence for the potential benefits of social networks in en-trepreneurship is abundant (e.g., Brüderl and Preisendörfer, 1998; Greve and Salaff, 2003; Ozgen and Baron, 2007). It has also been found in the context of immigrant entrepreneurs within enclaves, as well as in dispersed social networks (Ram et al., 2008) and families (Bates, 2011; Bird and Wen-nberg, 2016; Ley, 2006; Sanders and Nee, 1996). For example, Bird and Wennberg’s (2016) analysis of Swedish immigrant entrepreneurs showed that having family members in geographical proximity and access to the families’ financial capital increases immigrant entrepreneurs’ likelihood of remaining in entrepreneurship and exiting paid employment.

Broader institutional conditions: Finally, it is also worth remembering that immigrant entrepreneurship is embedded in the larger economic and political context of a country or city (Kloosterman et al., 1999; Klooster-man, 2003). Many institutions that influence the overall business climate for entrepreneurs also exert an influence on immigrants’ new businesses. A wide range of institutions has been associated with enabling entrepre-neurship, including the existence of stable property rights and rule of law (Acemoglu and Johnson, 2005; Estrin et al., 2013; Levie and Autio, 2011; Sobel, 2008), economic freedom (Sobel et al., 2010), the absence of cor-ruption, and many others (Dutta and Sobel, 2016). Sobel et al. (2010) even argue that the institutional environment (and in particular economic free-dom) of the host country is a key moderator between cultural diversity and

4 Portes and Zhou (1992: 514) quote the “smooth operation of rotating credit associa-

tions among Asian immigrant communities and the flexible transactions among Jewish

diamond merchants in New York” as examples of transactions under enforceable trust.

In both cases, a substantial number of transactions have taken place with hardly any

written contracting within the ethnic community.



the economic performance in a country. They suggest that while cultural diversity leads to conflict and expropriation in a bad institutional environ-ment, it stimulates entrepreneurship in an environment marked by high levels of economic freedom.

A positive climate for foreign trade can be particularly helpful for im-migrant entrepreneurs who often concentrate in industries with a high degree of foreign trade (Morgan et al., 2018; Neville et al., 2014). Another area with indirect but important effects is social security, as Olds (2016) showed in an analysis of immigrant self-employment in the United States. Comparing states that provided health insurance to immigrant children

Table 2: Context-Level Drivers of Immigrant Entrepreneurship

Core rationale: Immigrants are more likely to become entrepreneurs because of barriers (e.g., discriminations) and opportunities (e.g., ethnic markets) that they find in the host country.

Name of driver

Main argument Key articles

Blocked

mobility

Labor markets in the host country discriminate

against immigrants. This increases the attractiveness

of entrepreneurship as alternative to salary work.

Bonacich, 1973;

Light et al., 1972

Ethnic

enclaves

Geographically concentrated ethnic communities

provide easily accessible opportunities and means

of production for immigrant entrepreneurs, but less

so for natives.

Aldrich and Waldinger,

1990; Wilson and Portes,

1980

Social

networks

Local and transnational ethnic social networks ease

the access to key resources and fulfil the role of

business incubators.

Greene and Butler, 1996;

Sanders and Nee, 1996

Institutional

conditions

General political and economic institutions (e.g. rule

of law, economic freedom) influence the ease of

starting and succeeding with a business for immigrant

entrepreneurs.

Dutta and Sobel, 2016;

Estrin et al., 2013;

Kloosterman et al., 1999



with states that did so only after a 5-year waiting period, Olds (2016) found a significant positive effect of social security on the likelihood to engage in entrepreneurship. The availability of health insurance was associated with a 20 percent higher likelihood of self-employment and a 28 percent higher likelihood of owning an incorporated business. This suggests that access to public health benefits can encourage immigrants to take the risk of starting a business by reducing the risks of unforeseen health care costs in their family.

In summary, evidence suggests that access to co-ethnic networks and communities in the host country and internationally contributes positively to immigrants’ engagement in entrepreneurship, as well as to their success in these endeavors (table 2).

Individual-level driversSome drivers of immigrant entrepreneurship also reside at the level of the individual. Research has pointed to variables such as human and financial capital, demographic variables, and cultural heritage.5 In addition, demo-graphic and psychological differences between immigrants and natives can also play an important role.

The mechanisms leading to such differences vary. In many cases, dif-ferences between immigrants and natives are created by systematic pro-cesses, such as selective migration policies (e.g., favoring immigrants with high levels of human capital), self-selection of immigrants (e.g., immigrants with an entrepreneurial personality) or the transformation of characteristics through the migration process itself (e.g., when relocation induces learning).

Human capital: Education and work experience allow people to build up a multitude of capabilities that benefit entrepreneurial action, including communication skills, analytical competencies, and more specific capa-

5 As Kloosterman and Rath (2003) point out, the different levels of analysis also

reflect disciplinary differences, with sociologists being more concerned with the influ-

ence of the context and economists putting a stronger emphasis on factors residing

within the individual.



bilities, such as entrepreneurial alertness and planning. While the rela-tionship between human capital and entrepreneurial intent is complex,6 the majority of entrepreneurship research suggests an overall positive re-lationship between human capital and the propensity to start a successful business (Davidsson and Honig, 2003; Rauch and Frese, 2000; Unger et al., 2011). These relationships are particularly strong for task-related forms of human capital, such as knowledge of customers, suppliers, products, and services, and entrepreneurial skills (Unger et al., 2011).

The human capital of immigrants may differ from natives due to both selection and self-selection. Many contemporary immigration poli-cies clearly favor immigrants with high education, work experience and sought-after skills. At the same time, neoclassical human capital theory predicts that individuals with high levels of education and skill are more likely to emigrate in order to maximize potential returns on human capital (Haug, 2000; Massey, 1987).7 Empirical research has repeatedly supported this notion, e.g., for the case of Germany (Brücker and Trübswetter, 2004), the United States (Basu, 1997; Hughes and McCormick, 1985), and the Netherlands (Van Dalen and Henkens, 2007). Probably the largest piece of evidence for self-selection was provided by a detailed investigation of the willingness to emigrate in 23 OECD countries by Drinkwater (2003), showing a robust positive effect of education on emigration propensity.

6 For example, higher levels of human capital typically increase employability and

revenue prospects on the labor market and thus increase the opportunity costs for

entrepreneurship (Cassar, 2006; Gimeno et al., 1997).

7 Some researchers have argued for a more complex relationship between human

capital and migration, most prominently George Borjas (1987). Borjas argues that indi-

viduals opt for migration when their expected return on human capital is higher abroad

than in the country of origin and that the return on human capital depends largely on

the distribution of income in these countries. Therefore, lower-skilled migrants would

have a higher incentive to emigrate from countries with high income disparity to places

with a more even income distribution and vice versa. However, empirical results on the

Borjas model are mixed (Brücker and Trübswetter, 2004).



In addition to selection and self-selection, entrepreneurial skills can also increase through the migration experience itself. As Maddux and Ga-linsky (2009) and Fee and Gray (2014) have shown, extensive cross-cul-tural experience increases creative cognition by providing novel cues for creative expansion. Similarly, Vandor and Franke (2016) find that cross-cultural experience significantly increases the ability to identify profitable business opportunities. Through living abroad, individuals build a valuable stock of knowledge about products, services, and customer needs, which they can juxtapose with previous experience. Such comparisons facilitate the transfer of business ideas between countries (e.g., importing an idea from country A to country B) as well as creatively recombining ideas to create something completely new in a Schumpeterian sense.

In addition, the process of adjusting to the new environment can con-tribute to the development of skills related to opportunity exploitation. Upon arrival, immigrants usually face numerous non-routine challenges that render habitual ways of behaving ineffective. Coping with such chal-lenges has been associated with increases in self-esteem, tolerance for am-biguity, and stress management (Allen, 2006; Matsumoto, 2006)—skills that are critical in the field of entrepreneurship (e.g., Ward, 2001).

Against this background, it appears plausible that immigrants in many countries possess high levels of human capital and that this contributes to their inclination to start businesses. This idea has been repeatedly echoed in the immigrant entrepreneurship literature (e.g., Portes and Sensen-brenner, 1993; Valdez, 2008) and has found some empirical backing: Dif-ferences in human capital have been successfully used to explain variance of business entry rates between different immigrants groups from differ-ent countries of origin (Fairlie and Woodruff, 2007; Lofstrom and Wang, 2009; Sanders and Nee, 1996). The evidence is less conclusive but also predominantly positive for human capital as a predictor of differences between individual immigrants and natives, with some positive and some inconclusive findings for general types of human capital (Borjas, 1990; Clark and Drinkwater, 2000; Fairlie and Meyer, 1996; Kanas et al., 2003; Li, 2000; Portes and Zhou, 1996; Shinnar and Young, 2008; Vino-gradov and Kolvereid, 2007).



More human capital has also been associated with higher economic success of immigrant enterprises (Ley, 2006; Marger, 2001; Valdez, 2008). This relationship can be partially attributed to the effect of human capi-tal on what type of entrepreneurial opportunities are exploited by immi-grants. Achidi Ndofor and Priem (2011) find that immigrants with higher endowments of human capital are more likely to start businesses serving the mainstream market, rather than smaller ethnic markets, which is as-sociated with higher venture performance.

Demographic variables: A number of demographic variables can exert a more indirect but nonetheless powerful effect on immigrants’ inclination to start a business. Amongst others, these variables include gender and age. In many countries, men are still overrepresented among entrepreneurs (Kelley et al., 2016). While recent data from the Global Entrepreneurship Monitor suggests that the share of female business founders has strongly increased in recent years, the majority of surveyed countries still reports a gender gap in entrepreneurship (Kelley et al., 2016). The debate about the reasons behind this gap is ongoing, with explanations including differ-ences in motivation, industry choice, access to resources, and differences in education and work experience (Davidsson, 2006; Vossenberg, 2013).

At the same time, the female-male ratio of immigrants varies between countries. While, on a global scale, women migrate about as often as men (Husa et al., 2000; Menzies et al., 2004), men tend to be overrepresented amongst immigrants in some OECD countries, such as Austria, Germa-ny, and Australia (Brücker and Trübswetter, 2004; Drinkwater, 2003; Van Dalen and Henkens, 2007). In these countries, the overrepresentation of men among immigrants might contribute to a higher share of immigrants among entrepreneurs in general.

Similar remarks can be made for age. As Drinkwater (2003) points out, migrants in OECD countries tend to be “young and single.” For example, im-migrants in the European Union are on average overrepresented in the age groups of 16 to 30 years and underrepresented in all other groups. While the median age of the total population of the EU-28 was 42.6 years in 2015, the median age of immigrants to the EU-28 that year was just 27.5 years (Euro-



stat, 2017). The latter lies in the age group in which people have been found to start businesses most frequently (25 to 34 years; Kelley et al., 2016).

Thus, while age and gender are rarely explicitly discussed in research on immigrant entrepreneurship, some support can be found for the argument that the specific composition of immigrant populations in regard to gender and age may also contribute to their above average tendency to engage in en-trepreneurship (e.g., Li, 2000; Hammarstedt, 2006; Raijman and Tienda, 2000).

Personality traits: From a psychological perspective, immigrants may be favorably self-selected for traits that are associated with an increased like-lihood of becoming entrepreneurs. As Jonathan Levie (2007: 147) notes,

“migrants have taken a bold decision to move a long distance, [therefore] they may be less risk-averse than their stay-at-home peers. Second, they may be more confident of their own human capital and ability to succeed in a new, uncertain environment.” Similar arguments are made by Con-stant et al. (2003), Davidsson (2006), and others. Indeed, one might argue that the decisions to emigrate and to start a business share similar charac-teristics. Both tend to involve ambiguity and risk, and they also entail the hope for a better life, i.e., higher financial returns (Vandor, 2009).

Thus, it appears plausible that individuals who perceive emigration as an attractive path and follow it through will also be more attracted by the risk-reward-profile of an entrepreneurial career. A number of personal-ity traits can favor such a disposition, including achievement orientation (McCleland, 1985), risk propensity (Brockhaus, 1980), ambiguity tolerance (Begley and Boyd, 1987), and self-efficacy (Bandura, 1977).

While the effect of personality on entrepreneurial action has been dis-cussed critically (e.g., Gardner, 1988), recent empirical studies and meta-studies have isolated robust positive effects of many personality traits (Brandstätter, 1997; Rauch and Frese, 2007; Zhao and Seibert, 2006; Zhao et al., 2010). For example, a meta-analysis of 116 independent samples from 104 different articles found that the likelihood of business creation and business success correlates with a number of traits, including need for achievement, generalized self-efficacy, innovativeness, stress tolerance, need for autonomy, and proactive personality (Rauch and Frese, 2007).



Some of these personality traits have also been found to positively influ-ence emigration intentions. Empirical studies have confirmed the exis-tence of what Boneva and Frieze (2001) call a “migrant personality,” show-ing positive effects of need for achievement (Boneva et al., 1997; Chew and Zhu, 2002; Li et al., 2013), innovativeness (Chew and Zhu, 2002), risk-taking (Van Dalen and Henkens, 2007), openness (Jokela, 2009; Li et al., 2013), and self-efficacy (Van Dalen and Henkens, 2007) on the propensity for international migration.

To the best of our knowledge, there are no studies that directly measure differences in personality traits between immigrants and natives and their power to explain immigrant entrepreneurship. A few studies, however, provide hints that such a relationship exists, including Raijman and Tien-

Table 3: Individual-Level Drivers of Immigrant Entrepreneurship

Core rationale: Immigrants are (self-) selected for or develop specific characteristics that make them more entrepreneurial than natives.

Name of driver Main argument Key articles

Human capital Immigrants are (self-) selected for higher levels

of human capital which increase their affinity

towards entrepreneurial action as well as their

success.

In addition, migration can be a transformative

process which increases the level of

entrepreneurial skills.

Haug, 2000; Massey,

1987; Sanders and

Nee, 1996; Li, 2000;

Vandor and Franke,

2016

Demographic

variables

Immigrants are overrepresented in age and

gender groups that have a higher affinity

towards entrepreneurship.

— *

Personality traits Immigrants are self-selected for entrepreneurial

personality traits like risk-propensity and

achievement orientation.

Boneva and Frieze,

2001; Vandor, 2009

* No explicit key articles



da’s (2000) analysis of the personality traits of active and latent Mexican entrepreneurs in Chicago, and Vandor’s (2009) study of emigration inten-tions, entrepreneurship intentions, and personality traits among Austrian business students.

Summing up, there is evidence suggesting that individual-level factors explain the increased level of immigrant entrepreneurship (table 3).

3. Moderators of the immigration-entrepreneurship link

Of course, the forces described in Section 2 do not make every individual immigrant an entrepreneur. The applicability and explanatory power of the individual and context variables varies. This is already visible in the different levels of entrepreneurial activity of immigrants across countries. The 2012 Global Entrepreneurship Monitor found the share of immigrants among entrepreneurs to range from 6.1 percent in Western Europe to 28.8 percent in Sub-Saharan Africa (Xavier et al., 2013). Variance is also high within OECD countries, in particular when compared to the entre-preneurship rates of the native population (see OECD/European Union statistics in Section 1, table 1). For example, in 2012 and 2013, immigrants were less than half as likely to be entrepreneurs as the native-born popula-tion in Greece, but immigrants in Poland were more than twice as often entrepreneurs as the Polish native population (OECD/European Union, 2015). This suggests that the above-mentioned patterns are moderated by characteristics of the host countries, countries of origin, type of migration, and the type of entrepreneurship in question.

Characteristics of the host countries Many of the context-level drivers of immigrant entrepreneurship discussed in Section 2 vary between countries.

Level of discrimination: Blocked mobility and labor market discrimina-tion are often context- and time-specific. For example, the analysis of labor market discrimination in 11 countries conducted by Schneider et al. (2014)



showed that the rates of discrimination vary strongly between countries. These differences can stem from different levels of prejudice, information about the true skill levels of immigrants, and anti-discrimination policies. The predominant languages in a country and its immigrant population also influence discrimination. Immigrant groups with high levels of profi-ciency in the language of the host country or a similar mother tongue are naturally in a better position to engage in business than others (Becker and Blumberg, 2013; Mora and Davila, 2005).

Geographical concentration: The effect of ethnic enclaves also varies be-tween countries. On one hand, their prevalence depends on different mac-ro-level factors, such as the geographical conditions in a country, or the housing market conditions, and policy decisions. On the other hand, not all enclaves are alike. The beneficial effects of co-ethnic social networks for entrepreneurs will only occur when the share of their particular ethnic groups is large enough to enable meaningful exchanges and when there is a sufficient level of mutual trust (Evans, 1989). At the same time, large enclaves with a very high concentration of one ethnicity may also have adverse effects by creating strong competition among immigrant entre-preneurs (Andersson and Hammarstedt, 2015; Light and Gold, 2000; Ram et al., 2008).

Immigration policy: Furthermore, the economic capabilities of immi-grants in a country are strongly influenced by immigration policy (see Sec-tion 5). Throughout history, migration has often been a “pull phenomenon” that has been created by active recruiting of governments and employers of receiving countries (Piore, 1979).8 Today, many countries employ selec-tive immigration policies, favoring characteristics that are beneficial for entrepreneurship, such as business experience and high levels of educa-tion (Mahroum, 2001; Wadhwa et al., 2007). These policies influence the

8 E.g., the recruitment of “guest workers” (“Gastarbeiter”) from Central and Eastern

Europe and Asia in the 1960s and 1970s by Austria and Germany.



selection as well as self-selection of immigrants with particular skills, goals, and resources to particular countries.

Overall, this suggests that the context-level drivers of immigrants’ engagement in entrepreneurship are not similarly important in all coun-tries and regions, but are contingent on local socio-economic param-eters such as the predominant language, geographic concentration, and immigration policy.

Characteristics of the countries of origin In addition to host-country differences, many researchers have pointed out differences in the level of entrepreneurial activity of immigrant groups depending on their country of origin. For example, Fairlie and Lofstrom (2015) find large heterogeneity in an analysis of business ownership rates in the United States. The share of business ownership among immigrants from a specific country in the overall immigrant population varies between 5.1 percent (Philippines) and 7.8 percent (Jamaica) on one end of the spec-trum, and 23.1 percent (Korea) and 24.4 percent (Iran) on the other end. Similar levels of heterogeneity have been reported in the Netherlands (Sahin et al., 2007), Canada (Razin and Langlois, 1996), and other countries.

Access to resources: Some of the differences in entrepreneurial activity between immigrants of different countries of origin can be attributed to their unequal access to resources such as human and financial capital. For example, Fairlie and Woodruff (2007) find that education differences ac-count for about a third of the gap in the business ownership rate between Mexicans and Americans in the United States. Access to financial capital accounts for another quarter of the variance. Similar findings have been made in a number of studies (Cobb-Clark and Hildebrand, 2004; Lofstrom and Wang, 2009; Sanders and Nee, 1996). These papers suggest that differ-ences in resource endowment particularly enable immigrants from some specific countries to start businesses.

Culture and tradition: Another school of thought within immigrant en-trepreneurship research emphasizes the role of culture. This perspective



argues that higher self-employment rates of immigrants and the heteroge-neity of self-employment across groups with different countries of origin can be attributed to differences in traditions and values of entrepreneur-ship (Clark and Drinkwater, 2000; Light, 1984). According to this approach, some ethnic groups are endowed with cultural characteristics that provide advantages when engaging in entrepreneurship or emphasize the attrac-tiveness of entrepreneurship as an appropriate career choice.

Research proposes several ways in which culture can influence entre-preneurial action. Goldscheider (1986) argues that the Jewish value of oc-cupational independence as a mechanism of self-protection was carried over from Europe to the United States and contributed to the particular concentration of Jews in self-employment over generations (Zhou, 2004). Vinogradov and Kolvereid (2007) remark that, in many countries, it is par-ticularly immigrants from Asian countries who engage in entrepreneur-ship. They attribute this to cultural attributes such as low power distance. Basu and Altinay (2002) find a strong influence of cultural attributes and family traditions on business entry motives but conclude that the role of culture and tradition differs between ethnic groups. For some groups, the continuation of a family tradition as business entrepreneurs serves as the most important motive to start a business, whereas others prioritize wealth creation as motive for building a business.

Some authors also draw a connection to religious practices. Rafiq (1992) argues that some religions present self-employment in a positive light. For example, in the Muslim and Sikh communities, entrepreneur-ship is looked upon favorably because of prominent entrepreneurial fig-ures in both of these religions. Positive effects of culture and religion on entrepreneurial propensities have also been claimed for Western capitalist societies and values that emphasize risk, individualism, competitiveness, and wealth generation (Morris et al., 2002; Weber, 1904).

A related perspective on the “culture and tradition” argument has been provided by works that focus on the entrepreneurial activity in the country of origin (Akee et al., 2013; Yuengert, 1995). The central argument is that the exposure to concepts of self-employment and an increased availability of entrepreneurial role models in the country of origin can provide addi-



tional positive influences on the attractiveness of entrepreneurial career choices (Ilhan-Nas et al., 2011). Empirical support for this hypothesis is mixed. While Akee et al. (2013) and Yuengert (1995) find that immi-grants from countries with high self-employment rates are more likely to become self-employed in the United States, Fairlie and Meyer (1996) find no such correlation.

In summary, existing research has provided some evidence for the in-fluence of country-of-origin variables, such as resource composition and cultural imprinting, on the likelihood of immigrants to engage in entre-preneurship.

Different types of migration Another noteworthy influence on immigrant entrepreneurship is the type of migration experience in question. Migration can take place within and across international borders, can take temporary and permanent forms, and can be made more or less voluntarily. These parameters influence how selective and transformative the immigration process can be and thus might impact the prevalence of the individual-level and context-level driv-ers discussed in Section 2.

Internal and international migration: While the focus of most immigrant entrepreneurship research is on international migration, it has been noted that within-country migration might also be a worthwhile field of inquiry for entrepreneurship scholars (Levie, 2007). In fact, within-country migra-tion is a far more common phenomenon than international migration with an annual 5–20 percent of a country’s population migrating every year, de-pending on country, time, and definitions (Greenwood, 1989).

Conceptually, the case is somewhat ambiguous. On the one hand, one can make the argument that internal migrants, just like international mi-grants, are likely to have more entrepreneurial personalities than individu-als who never move outside of their habitual environment. Also, internal migration might act as a self-selection mechanism for younger members of the population, who are typically more likely to start businesses. On the other hand, migration within a country is less costly than internation-



al migration in terms of financial relocation expenses and psychological strains, since the new environment is less unfamiliar. Thus, self-selection and transformation effects should be weaker than for international immi-grants. Furthermore, selective immigration policies tend not to be an issue for internal migration.

While empirical evidence is rare, Levie (2007) has demonstrated for the case of the United Kingdom that internal migrants are indeed more likely to become entrepreneurs than life-long residents. This suggests that inter-nal immigrants are also affected by some of the above-described drivers of entrepreneurial action.

Temporary and permanent migration: While public perception is domi-nated by images of permanent immigration, an increasing share of immi-gration in OECD countries is temporary. The most frequent purposes of temporary migration are time-restricted work assignments and education. In 2015 alone, OECD countries issued roughly 1.5 million study permits and 600,000 seasonal work permits. Furthermore, they saw 600,000 work-ing holidaymakers and trainees, and 150,000 international within-compa-ny transfers (OECD, 2017). Compared to the 4.7 million counted as per-manent immigrants in that year, this amounts to a considerable portion of migration (OECD, 2017).

Empirical studies have shown that temporary migrants are more in-clined to start businesses than non-migrants. A disproportionately large number of individuals who have studied or worked abroad choose an en-trepreneurial career path once they return to their country of origin (Am-massari, 2004; Black and Costaldo, 2009; Demurger and Xu, 2011; Euro-pean Commission, 2014; McCormick and Wahba, 2001; Saxenian, 2005).

Returning migrant entrepreneurs can benefit from having lived abroad in various ways. Extended stays in other countries allow them to build stocks of financial capital in the form of accumulated savings (Black and Costaldo, 2009; Demurger and Xu, 2011). It further facilitates building up human capital in form of education and work-experience (Wahba and Zenou, 2009), as well as knowledge about new products, services, and customer needs which can be applied to identify novel entrepreneurial op-



portunities (Vandor and Franke, 2016), as well as creating transnational networks that facilitate international trade (Neville et al., 2014). Thus, we can expect that it is particularly the individual-level effects that contrib-ute to the positive effect on entrepreneurial activities upon return. At the same time, context-level effects such as discrimination and language bar-riers are less likely to play a role in the decision of returning immigrants to start a business.

Voluntary and forced migration: Finally, the effects of migration on entre-preneurial intent and skill are also influenced by whether the decision to migrate is made voluntarily. In situations of forced migration (e.g., because of natural disaster or war), self-selection (e.g., due to an entrepreneurial personality or in order to seek higher returns on human capital) is less like-ly to play a role in shaping the emigration decision than when migration is a freely made lifestyle choice. Likewise, policies tend to be less selective in cases of forced migration than for voluntary migration. This suggests than involuntary immigrants may not have some of the selection advantages discussed above, i.e. a more entrepreneurial personality or higher levels of resources.

Overall, we conclude that the international nature and permanence of migration, as well as the degrees of freedom in the migration decision, ex-ert an influence on how selective and transformative the migration process will be. International, permanent, and voluntary migration are probably more affected by selection and self-selection than internal, temporary and forced migration. At the same time, context-level factors likely play a more important role for international and permanent migration than for inter-nal and temporary migrants.

Different types of entrepreneurship Of course, not all types of entrepreneurship are alike. Arguably, there is a difference between self-employed entrepreneurs who earn just enough to sustain their living (necessity-motivated entrepreneurs), and innova-tive growth-oriented company builders (opportunity-motivated entre-preneurs). Much of the literature has focused on the first type and found



evidence that immigrants are overrepresented among self-sustaining en-trepreneurs who start a business because of the lack of a viable alternative. More recently, research from the United States and Canada has suggested, however, that immigrants are sometimes also more likely to become inno-vative and growth-oriented founders than the native population (Chaganti et al., 2008; Green et al., 2016; Saxenian, 2002; see Section 4). For example, a large-scale longitudinal analysis of entrepreneurs in 11 states in the Unit-ed States found that immigrants were not only overrepresented among entrepreneurs in general but also among entrepreneurs that had received venture capital funding: immigrants constituted 27 percent of VC-backed entrepreneurs, while representing only 19 percent of the workforce (Kerr and Kerr, 2016).

The distinction between necessity-oriented and opportunity-driven entrepreneurship is important. Depending on the type of entrepreneur-ial activity, the importance of individual-level and context-level drivers of immigrant entrepreneurship can vary. Blocked mobility and ethnic en-claves tend to be associated with necessity-motivated entrepreneurship. Ethnic enclaves provide particularly high benefits for immigrants who are excluded from the labor market due to discrimination and a lack of lan-guage skills. For them, ethnic communities can provide protected markets in which their stock of knowledge and experience can be utilized through self-employment. At the same time, ethnic markets offer limited potential for growth due to their relatively small size and purchasing power (Ander-son and Hammarstedt, 2015; Waldinger and Aldrich, 1990). Furthermore, as Sequeira and Rasheed (2006) argue, strong networks within the enclave can lead immigrant entrepreneurs to focus only on ethnic resources and opportunities. The interaction with the ethnic community and other im-migrant entrepreneurs can create isomorphic pressure to “simply replicate and reproduce old forms [...] rather than break new ground in products, process, or administrative form” (Aldrich and Waldinger 1990: 112).

In contrast, immigrants with lower involvement in ethnic enclaves are more likely to pursue mainstream market strategies that are associ-ated with higher venture performance and opportunity entrepreneurship (Achidi Ndofor and Priem, 2011). At the same time, higher levels of human



capital and entrepreneurial personality have been associated with more profitable and innovative types of immigrant entrepreneurship (Kerr and Kerr, 2011; Ley, 2006; Marger, 2001; Valdez, 2008; Zhao et al., 2010).

In sum, this suggests that some of the context-level drivers, such as blocked mobility and ethnic enclaves, are more likely to be drivers of ne-cessity entrepreneurship. Individual-level drivers, such as human capital and personalities, appear to be more relevant stimulants of opportunity-driven entrepreneurship (table 4).

Table 4: Moderators of the Immigration-Entrepreneurship Link

Name of moderator

Main argument Key articles

Host country

differences

Host countries have different levels of labor market

discrimination, prevalence and density of enclaves

and immigrant networks.

Furthermore, immigration policies moderate

selection and self-selection effects.

Mahroum, 2001;

Kloosterman and

Rath, 2001

Country-of-origin

effects

Immigrant groups differ in their propensity for

entrepreneurial actions due to cultural, economic

and political characteristics of their country

of origin.

Basu and Altinay,

2002; Borjas, 1987;

Fairlie and Lofstrom,

2015

Type of migration Selection, self-selection and transformation

effects vary depending on the type of migration

(international vs. within-country, temporary vs.

permanent, voluntary vs. forced).

— *

Type of

entrepreneurship

Blocked mobility and ethnic enclave arguments are

associated with necessity entrepreneurship, while

high levels of human capital and an entrepreneurial

personality are more common drivers of opportunity

entrepreneurship.

— *

* No explicit key articles



4. The consequences of immigrant entrepreneurship

Much of the research in the field is concerned with the eco nomic and so-cial consequences of immigrant entrepreneurship for founders and their host societies. While the debate is controversial (Zhou, 2004), immigrant entrepreneurship is in general associated with many positive economic and social contributions.

Economic integration of immigrants Self-employment may benefit immigrants by creating income and facilitat-ing economic integration for them and their families.

Employment and income: First and foremost, self-employment is chosen by many founders in order to avoid unemployment, create income, and increase social participation (Zhou, 2004). Empirical findings show that entrepreneurship is an effective means of achieving these goals. Historical analysis suggests that low rates of Chinese and Japanese unemployment during the Great Depression of the 1930s were due to the ethnic commu-nity’s efforts in helping co-ethnic workers become self-employed (Light, 1972). The studies of Miami’s Cuban enclave and New York’s Chinatown offered consistent evidence to support this argument (Portes, 1987; Zhou, 1992). In many cases, self-employment also enables entrepreneur immi-grants to achieve higher incomes than immigrants in the labor market (Constant, 1998; Constant and Schultz-Nielsen, 2004; Fairlie and Meyer, 1996; Portes and Zhou, 1996; Lofstrom, 1999) and similar or only some-what lower earning levels than native-born citizens (Fairlie and Lofstrom, 2015; Lofstrom, 2015).

Economic integration: As Fairlie and Lofstrom (2015) point out, the earn-ings of self-employed immigrants also tend to increase over time and ap-proach the level of the native population. As Lofstrom (1999; 2002) finds in 1980 and 1990 United States Census data, self-employed immigrants reach earnings parity with observationally similar entrepreneurs born in the United States after about 25 years in the country. In the case of Canada,



Antecol and Schuetze (2006), Li (2000), and Green et al. (2016) confirm this finding on a number of dimensions: the likelihood of founding a busi-ness, its revenues, and associated jobs all increase with time spent in the country. Some studies find evidence of even higher income among immi-grant entrepreneurs than among natives: For the case of Canada, Hiebert (2003) reports that self-employed immigrants had higher average incomes than the native-born self-employed in 1995 and also exceeded the average income of the overall immigrant population.

Eryadin et al. (2010) also note that immigrant entrepreneurs tend to operate increasingly like native entrepreneurs after some time. In an analy-sis of Turkish entrepreneurs in the Belgian city of Antwerp, they find that many founders start their businesses in ethnic neighborhoods, but later move to other locations where they perceive market opportunities in serv-ing the general population. Analyses of second-generation immigrant en-trepreneurs in Amsterdam show a similar pattern (Baycan-Levent et al., 2009). Second-generation entrepreneurs are more likely to build human capital and to choose more heterogeneous, non-traditional, and promising industries than first-generation immigrants (Baycan-Levent, 2009; Beck-ers and Blumfeld, 2011). Also, they pursue less “ethnic” opportunities and focus more on industries with higher density of opportunities in general, e.g., in technology (Baycan-Levent et al., 2009).

Intergenerational benefits: As Sanders and Nee (1996) and Zhou (2004) argue, the economic benefits of business ownership enable families to in-vest in their children’s futures. Having the financial resources to pay for higher education promotes the acquisition of valuable human capital by the second generation. In addition, income can be used to finance “round-ing out” experiences like private tutoring, travel, and music lessons, en-abling young people to interact in a variety of social settings. As a result, there is an intergenerational benefit to self-employment beyond that re-vealed by analyses of current income (Sanders and Nee, 1996).

Overall, this implies that entrepreneurship is an effective means for the economic and social integration of immigrants, in some cases even more effective than employment on the labor market.



Economic effects for the overall society In addition to the economic and social benefits that immigrants them-selves receive, migrant enterprises bring benefits to the wider society.

Job and wealth creation: In many countries, immigrant entrepreneurs play a considerable role in the domestic economy. As stated in the introduction, immigrants in the United States are estimated to have created 450,000 jobs and US$52 billion in revenues between 1995 and 2005 (Wadhwa, 2009).

Empirical analyses suggest that immigrant-founded firms do not need to shy away from comparison with native-founded firms. In the United States, immigrant-founded businesses appear to be about as likely to cre-ate jobs as businesses founded by entrepreneurs born in country. They also provide roughly similar average salaries ($31,740 in immigrant-founded enterprises, $35,880 in businesses founded by natives; Fairlie and Lof-strom, 2015; Fairlie, 2013). Some studies have found immigrants to be even overrepresented among growth-oriented businesses in the United States (Chaganti et al., 2008), Germany (Metzger, 2014), and in the aver-age of the 69 countries surveyed in the Global Entrepreneurship Monitor (Xavier et al., 2013). However, other research has found contradicting or inconclusive evidence, showing that immigrant-founded businesses create significantly fewer jobs than businesses founded by natives (Fairlie, 2013; Kerr and Kerr, 2016).

Interestingly, Kerr and Kerr (2016) find evidence for higher volatility of performance outcomes of immigrant entrepreneurs in the United States. They are more likely to fail than native-born entrepreneurs, but those who succeed create higher employment growth than natives. The authors argue that sorting immigrant entrepreneurs into geographic locations and in-dustries with higher associated risks and returns might explain these pat-terns. It appears that the immigrant-founded ventures under study were more prone to exploit risky business opportunities than the native entre-preneurs. Neville et al. (2014) provide a complementary perspective: in an analysis of Canadian survey and taxation data, they find that immigrant-owned companies have higher revenues and profits than natives, but only when operating in export-driven industries. In industries that concentrate



on the Canadian market, their business performance is worse. Morgan et al. (2018) confirm this notion and add the finding that the revenue gains realized through immigrants’ high export orientation are diminished by a tendency to engage in excessively risky and thus less profitable business opportunities.

Either way, these findings suggest that immigrant businesses do not only contribute through creating employment for themselves and others, but also as buyers, suppliers, employers, and taxpayers.

Innovation: Recent work has highlighted the contribution of immigrants in the fields of innovation and high technology entrepreneurship (Wadhwa et al., 2007; Hart and Ács, 2011; Kerr and Kerr, 2016). In the 2000 United States census, immigrants represented 24 percent and 47 percent of the science and engineering workforce with bachelor and doctorate degrees, respectively. This contribution was significantly higher than the 12 percent share of immigrants in the working population (Kerr and Kerr, 2011).

Against this background, it is no surprise that immigrants are also over-represented as founders in a number of industries that are typically associ-ated with innovation, such as biotechnology (Monti et al., 2007; Saxenian, 2002) and VC-backed firms (Kerr and Kerr, 2016). Wadhwa et al. (2007) find that a quarter of engineering and technology companies in the United States were started by immigrants, with this number reaching 40 percent and more in specific dense areas, such as the California Bay Area. At the same time, immigrants were also found to be more likely to engage in oth-er innovation-related activities, such as conducting Nobel-prize-winning research (Peri, 2007) and applying for patents in the United States (Hunt and Gauthier-Loiselle, 2010; Kerr and Lincoln, 2010).

Vitalizing streets and neighborhoods: High cultural diversity is often considered as beneficial for the development of cities and has been associ-ated with an increase of consumption choices (Quigley, 1998) and attrac-tion of creative talent (Florida, 2002). On a smaller scale, migrant entre-preneurs can also help to develop streets and neighborhoods. As owners of local businesses, they have a stake in the prosperity, accessibility, and



safety of the street or neighborhood (Kloosterman and Rath, 2003). As Kloosterman and van der Leun (1999) argue, immigrant entrepreneurs can thus serve as transforming agents in ethnic communities and improve the neighborhood.

Role models: Immigrant entrepreneurs also serve as entrepreneurial role models to other immigrants (Kloosterman and der Leun, 1999; Zhou, 2004). The availability of such role models is important to inspire self-confidence and entrepreneurial action by displaying the feasibility and benefits of immigrant entrepreneurship. As Shinnar and Young (2008) ar-gue, role models can be particularly important within families and act as a pull-factor for immigrants. At the same time, immigrant role models can also break stereotypes amongst natives in the entrepreneurship ecosystem who might discriminate against immigrant founders. As Saxenian (2002) notes in her investigation of immigrant entrepreneurs in the California Bay Area, the lack of role models was perceived as contributing to a “glass ceiling” that prevented Indian and Chinese professionals from entering higher-level positions.

Remittances: Another noteworthy economic effect of immigrant en-trepreneurship is created through remittances of entrepreneurs to their country of origin. Many immigrant entrepreneurs support their family and kin in the countries of origin through remittances, which are used for consumption, investment, and, in some cases, even as venture capital for entrepreneurs in the countries of origin (Martinez et al., 2015). Overall, remittances have been estimated to reach around US$429 billion annually, which is about four times the volume of foreign aid (World Bank, 2016). These money flows are associated with positive effects for the country of origin in terms of its economic development, poverty and the accessibility of financial infrastructure (De Haas, 2005; Martinez et al., 2015). Some au-thors have argued for remittances being a better and more market-driven form of foreign aid which is less susceptible to corruption and inefficiency, whereas others have pointed out that remittances can cause harm by creat-



ing dependence and incentivizing the permanent emigration of talent (see DeHaas (2005) for a thorough discussion).

For the host country, remittances constitute negative economic conse-quences as they reduce domestic consumption and savings. Baas and Mel-zer (2012) however argue that remittances also influence the real exchange rate and can contribute to the depreciation of the currency of the sending country, thereby promoting export.

Crowding out: Another potentially negative effect for the host country is that immigrant businesses can increase competition and thereby crowd

Table 5: Economic Effects of Immigrant Entrepreneurship

Name of effect Main argument Key articles

Economic

integration of

immigrants

Immigrant entrepreneurship allows entry

to paid employment, higher income and

intergenerational upwards mobility.

Fairlie and Lofstrom, 2015;

Portes and Zhou, 1996

Positive

spillover

effects

Immigrant entrepreneurs benefit the public by

creating jobs, wealth, welfare and innovation.

They also act as entrepreneurial role models

and can benefit urban development.

Hunt and Gauthier-Loiselle, 2010; Kerr and Kerr, 2011; 2016; Kloosterman and van der Leun, 1999; Saxenian, 2002

Remittances Money transfers into countries of origin enable

consumption and investments and contribute

to the development of the country. At the

same time, they lower consumption and

investment in the host country.

Baas and Melzer, 2012;

de Haas, 2005;

Martinez et al., 2015

Crowding out

of native

business

Immigrant entrepreneurs can create additional

competition and thereby crowd out native

businesses.

Fairlie and Meyer, 1997;

2003; Nathan, 2014



out extant native businesses (Fairlie and Lofstrom, 2015). Unfortunately, empirical research into these issues is intricate, rare, and rather inconclu-sive.9 In the United States, Fairlie and Meyer (2003) indeed find some evi-dence for crowding out of native businesses by immigrant businesses. At the same time, they also infer that average earnings of native businesses increase through the entrepreneurial activity of immigrants. This might be interpreted as crowding out, but it could also be a sign of upward mobility among natives (Fairlie and Lofstrom, 2015). A comparable analysis of ef-fects of immigration on native black and female self-employment found no signs of crowding-out effects (Fairlie and Meyer, 1997). Conceptually, Na-than (2014) argues that increased competition from immigrant entrepre-neurs could provide incentives for innovation among native entrepreneurs rather than produce crowding-out effects. Furthermore, to the extent that (skilled) migrants identify new opportunities, the net effect of their ven-tures on firm entries can be expected to be positive (Nathan, 2014).

In summary, prior research suggests that immigrant entrepreneurship produces beneficial effects for the immigrants themselves as well as for the general public; the latter by providing employment, welfare, and innova-tion, as well as positive role models to other immigrants. However, there are also negative effects (table 5).

5. Policy implications

In light of its many positive economic effects, immigrant entrepreneur-ship is a natural target for policymaking. Policies on immigrant entrepre-neurship typically aim to increase the share of entrepreneurs amongst extant immigrants (and thereby counteract high rates of immigrant un-employment) or to increase the chances of survival and success of their businesses. In addition, policy makers often aim to attract new immi-grant entrepreneurs.

9 See e.g., Kerr (2013) on crowding-out and crowding-in effects for high-skilled labor.



Therefore, most policies focus on the promotion of entrepreneurial in-tent and capacity among immigrants or the attraction of entrepreneurial talent amongst potential immigrants and return migrants.

Entrepreneurship policy Training and resources: The provision of training is a very common policy intervention for promoting immigrant entrepreneurship. As Van Niekerk et al. (2008) found in an analysis of 146 European policy inter-ventions promoting immigrant entrepreneurship, 83 percent contained measures designed to inform, consult, or train entrepreneurs. The training curricula often put an emphasis on encouraging entrepreneurs to cater to mainstream rather than to ethnic markets, e.g., by changing location, business sector, and marketing strategy or by building collaborations with other businesses. Some training interventions also make an effort to acti-vate transnational social networks that offer access to personnel, strategic information, or supplies of inexpensive or ethnically unique goods (Rath and Swagerman, 2016).

Many policies also facilitate networking as well as the provision of fi-nancial resources. In the analysis of Van Niekerk et al. (2008), 54 percent of policies also involved direct funding or providing access to funding in-struments. Such instruments often include micro-credits, bank guaran-tees and subsidies, and bridging allowances or individual-level stipends (Kontos, 2003; Rath and Swagerman, 2016). While public authorities pro-vide many such measures, in particular at local and city levels, there are also numerous private (often non-profit) institutions that engage in train-ing and funding, such as immigrant associations, business associations, and support agencies (Rath and Swagerman, 2016).

Evidence on the effectiveness of training and resource provision is scarce and mixed. In a review of support instruments in five cities in the United Kingdom, Deakins et al. (2003) find that support services offered to immigrants were only accessed by 7 percent of the target group. While the overall influence of services was deemed positive, the authors identi-fied a number of challenges in the support ecosystem. In addition to its fragmentation and complexity, Deakins et al., (2003) criticized the mis-



alignment of incentives between different support agencies, as well as a lack of robust intelligence on the support needs of their constituents. Rath and Swagerman (2016) also raise the question whether distinct support instruments are needed for immigrant entrepreneurs or whether there are circumstances in which immigrants should access mainstream business support instead. Based on their analysis of European policies, they find that distinct support programs are effective for the “most difficult to reach groups and vulnerable groups” (Rath and Swagerman, 2016: 157) as they can focus on particular needs and overcome language barriers. For others, Rath and Swagerman conclude that participation in mainstream programs might be more effective because it allows participants to build a larger and more diverse set of business contacts.

Spatial policy: Kloosterman and van der Leun (1999) argue that immi-grant entrepreneurs can also be supported via instruments of urban and regional development. These can include providing cheap and accessible commercial spaces in neighborhoods with many immigrants, applying flexible rental policies, and providing attractive opportunities for owner-ship. Such policies reduce the costs of starting a business and facilitate entrepreneurship for immigrants with limited access to financial capital. As Kloosterman and van der Leun note, the intended side effect of such in-terventions is that successful immigrant entrepreneurs are incentivized to stay in their neighborhoods and help transform them through commercial gentrification, rather than moving to socio-economically more attractive parts of town (Kloosterman and van der Leun, 1999).

In practice, the use of space policy as means of immigrant entrepre-neurship policy is still rare. Rath and Swagerman (2016) did not find evidence for specific attention to immigrant entrepreneurship in any zoning plan of European cities. A few cities, however, provide targeted information on business locations to migrants, including Vienna, Stutt-gart, and Zagreb. A number of cities also provide business space to immigrant entrepreneurs through business incubators (Rath and Swa-german, 2016).



Communications: Collins (2003) argues that public authorities need to improve their communication with immigrant communities. This con-cerns business support interventions, but, more importantly, the many ad-ministrative interactions between businesses and public authorities, from registering a business to filing tax reports. Effective communication strate-gies can include providing translated versions of documents, hiring multi-lingual administrative staff, and actively marketing public services through communication channels of ethnic communities (Collins, 2003).

Unfortunately, as Rath and Swagerman (2016) find in an analysis of pol-icies in 28 European cities, such measures are rarely implemented. Many bureaucratic rules and regulations—which often are already difficult to grasp and need “translation” into non-technical language for native entre-preneurs—are thus even more difficult to understand for immigrant entre-preneurs and require an additional level of translation. In this context, it is unsurprising that a Viennese study, for example, showed that 46 percent of migrant entrepreneurs were not aware of any public support service or financial benefits for entrepreneurs (Enzenhofer et al., 2007).

Indirect policy interventions: In addition to dedicated immigrant en-trepreneurship policies, the creation of immigrant businesses can also be stimulated by indirect measures that are part of broader policy frame-works. As discussed in Section 2, a range of institutions can influence the likelihood and success of immigrant entrepreneurship and can thus be a subject of policy. These areas can include the promotion of export and trade as well as economic freedom, for example through a reduction of regulations, stable property rights, or reduced corruption (Collins, 2003; Dutta and Sobel, 2016; Estrin et al., 2013; Kloosterman, 2003). Similarly, a fast integration of immigrants into the social security system of the host country has been associated with higher levels of entrepreneurship (Olds, 2016). Public agencies can also integrate immigrant policy directives into their public purchasing practices, for example by making it mandatory to make some public purchases from immigrant entrepreneurs (Klooster-man, 2003).



In summary, we can see that there are many different policy instru-ments that can be used to specifically support immigrant entrepreneur-ship. Policies that create training, funding, space, or additional demand for immigrant businesses can help overcome particular challenges, for ex-ample due to language, access to resources, or lack of information, as well as help leverage their strengths. Furthermore, a number of policies that are not explicitly targeted at immigrants can also impact on their entre-preneurial engagement, including trade policy, public procurement, and social security.

Immigration policy The above-discussed policy interventions pursue the goal of facilitating entrepreneurship among immigrants who are already in the country. In contrast, a number of countries also employ policies that aim to select for entrepreneurs already in the immigration process.

Start-up immigration programs: In an attempt to attract immigrant entre-preneurs, many developed countries have created special visa categories and entry options for potential business founders and owners (Mahroum, 2001). Ley (2003) estimates that at least 30 countries run some type of business immigration program. Their main purpose is to “entice entrepreneurs with a proven track record and substantial economic capital to relocate from their countries of origin, with citizenship being the prize for moving their families and commercial activities to new lands” (Ley, 2003: 426–27).

One of the largest and most active programs of this type is the Ca-nadian Business Immigration Program, which has attracted over 300,000 immigrants between 1983 and 2001 (Wong, 2003).10 During this period, its main focus has been geared towards entrepreneurs and required ap-plicants making a capital investment in a business, being active in its own-ership, and creating at least one job for a non-family member. Applicants also had to demonstrate business experience, financial assets, and a busi-

10 In comparison, Wong (2003) finds that similar instruments in the United States and

Australia have benefited 91,000 and 6,000 individuals over that time period.



ness plan that was evaluated by Canadian immigration officers. The devel-opment of the business was later closely monitored by government agen-cies (Ley, 2006).

While the program has been generally perceived as an effective policy which attracted a large number of entrepreneurs (Ley, 2006; Lofstrom, 2014; Wong, 2003), it has also been criticized for the comparatively low economic performance of participating entrepreneurs (Ley, 2003, 2006). Against this background, the entrepreneurial stream of the program has been adapted many times over the years and, most recently, started to put a stronger emphasis on risk and risk sharing with the private sector. In-stead of individual entrepreneurs, the focus lies now on start-ups. Rather than being expected to hire one Canadian citizen within two years, ap-plicants for a start-up visa are required to have secured support and an in-vestment from a Canadian business angel ($75,000) or venture capital fund ($200,000), and to be part of an incubation or acceleration program. The program also offers additional streams for self-employed immigrants and investors (Government of Canada, 2017). Comparable policies have been implemented in other places as well, including the United Kingdom, Aus-tralia, and several European countries. In the United States, for example, immigrants who invest $1 million in businesses and create or preserve at least 10 full-time jobs for domestic workers are given special preference (Fairlie and Lofstrom, 2015).

The jury is still out on whether these new types of start-up focused visa-programs are more effective than their predecessors (Lofstrom, 2014). Entrepreneurship visa programs run the risk of being overly selective by focusing on individuals with high wealth and already existing enterprises, while missing out on talented entrepreneurs in earlier development stages and from countries with more difficult access to risk capital. Studies in the United States suggest that many of today’s immigrant entrepreneurs initially entered the country with a work or study visa and only decided to start up a business later (Kerr, 2013; Wadhwa, 2007). In fact, Wadhwa et al. (2007) found in a study of immigrant start-up founders that over 52 per-cent had immigrated with the motive of pursuing higher education, while only 1.6 percent had already come with the initial motive of starting a busi-

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ness. Unfortunately, most immigration policies are not very open to such changes of heart. As Naudé et al. (2015) note, migrants entering on a work visa in many cases may not be allowed to start a business while on this specific visa. Overall, this suggests that a large part of the entrepreneurial potential of immigrants may not be currently realized.

Return migration policy instruments: Immigration is not a one-way road. As highlighted before, a disproportionately large number of individuals who have studied or worked abroad choose an entrepreneurial career path once they return to their country of origin (Ammassari, 2004; Black and Costaldo, 2009; Demurger and Xu, 2011; McCormick and Wahba, 2001; Saxenian, 2002, 2005; Wahba and Zenou, 2009). Return or repatriation is thus often associated with higher levels of entrepreneurship and positive economic and social effects such as revitalizing rural economies and pov-erty alleviation (Demurger and Xu, 2011).

The economic and political climate of a country plays a significant role in the attraction of highly skilled migrants, as has been witnessed with the Brexit vote and the election of president Trump in 2016. Even before any concrete policy measures had been implemented, the public perception of these events had already triggered a measurable decrease in graduate student applications for universities in the United Kingdom and the Unit-ed States (Farrugia and Andrejko, 2017). At the same time, universities in countries associated with more open policies, such as Canada and Aus-tralia, saw a significant increase in applications in the aftermath of these events, suggesting a redirection of mobile international talent in their di-rection (Gewin, 2017).

An increasing number of countries also employs policies to promote return migrant entrepreneurship, including India, Taiwan, Romania, and the Philippines (Grosu, 2015). China, one of the most cited examples of a country with ambitious return entrepreneurship policies, is “aggressively courting” return entrepreneurs (Saxenian, 2002: 184). Chinese policies en-courage return entrepreneurship through an array of incentives, includ-ing tax reductions, subsidized housing and rents, support for spouses, and other benefits for returnees that start a business. Furthermore, returnee



Table 6: Policy Instruments for Promoting Immigrant Entrepreneurship

Name of policy

Description of policy Key articles Examples

Training and

resources

Providing training, access to

networks and funding.

Deakins et al., 2003;

Rath and Swagermann,

2016; Van Niekerk et

al., 2008

Nuoret Yrittajat

Projekti (Young

Entrepreneurs

Project in Helsinki)*

Spatial policy Assisting immigrant

entrepreneurs to gain access

to (subsidized) business

locations.

Including areas for immigrant

entrepreneurship in urban

zoning plans.

Kloosterman and

Van der Leun, 1999

Stuttgart’s

Economic

Development

Department*

Communications Providing information related

to founding a business and

support instruments in

different languages and

communication channels.

Collins, 2003 Vienna Business

Agency*

Indirect policy

interventions

Fostering immigrant

entrepreneurship through

promoting economic freedom,

export and trade, reliable social

security, and a business friendly

environment.

Kloosterman, 2003;

Olds, 2016

Dutch

"Entrepreneurial

Society" program*

Start-up

immigration

programs

Granting visa to entrepreneurs

and start-ups with backing from

entrepreneurship ecosystem.

Ley, 2006;

Wong, 2003

Canadian Business

Immigration

Program*

Return

migration

policy

instruments

Offering financial incentives and

support for immigrants who

return into their country

of origin and start a business.

Saxenian, 2002, 2005;

Zweig and Wang,

2013

Chinese "1,000

talents program"*

*Examples from Kloosterman (2003), Ley (2006), Saxenian (2002), Rath and Swagerman (2016), and Zweig and Wang (2013)



entrepreneurs are offered places in dedicated “return student venture parks” (Zweig et al., 2006; Saxenian, 2002).

The “1,000 talents” program, which has been implemented since 2008, has been deemed particularly successful (Zweig and Wang, 2013). Like previous programs, it granted far-reaching privileges and rights to return-ing technology entrepreneurs and additionally promoted a very active recruitment process of potential returnees by public officials on city and province level. Chinese universities were also involved and financially in-centivized to take part in recruitment. Between 2011 and 2013, the overall program (which also caters to non-entrepreneurs, such as scientists and engineers) has generated over 6,000 applications and 1,500 selected grant-ees, of which 16 percent are estimated to be entrepreneurs (Zweig and Wang, 2013).

In sum, there is a number of policy measures that allow a country to pro-mote and increase the positive effects of immigrant entrepreneurship (table 6).

6. Conclusion

Immigration has become a topic of heated political and public debate. Even in traditionally migration-friendly countries, such as the United States and Australia, the positive economic and social impact of immigration has been questioned. The findings of our literature review suggest that, at least in the area of immigrant entrepreneurship, positive assessments of migra-tion are still warranted. In spite of significant barriers to starting a busi-ness (language difficulties, discrimination, and lack of resources, amongst others) many immigrants decide to become entrepreneurs. In the major-ity of countries, they even do so more often than the native population. Their businesses contribute to the creation of jobs for both immigrants and natives alike, promote innovation, and improve economic welfare. While evidence for the crowding out of native-run businesses is limited and the effect of remittances on host countries is mixed, a number of studies sug-gest that immigrant entrepreneurs create positive spillover effects for the



broader society through additional tax revenues, employment opportuni-ties, and innovation.

Of course, the inconvenient question remains whether such gains for host countries come at the expense of countries of origin. In fact, it has been argued that immigrant entrepreneurs are part of a brain drain, pro-ducing a loss of some of the most talented and productive individuals for the societies they chose to leave (Saxenian, 2002). Real entrepreneurial talent is often scarce, and so its permanent departure is likely to have a retarding effect on the development of the country of origin (Solimano, 2008). Such arguments certainly seem justified, and they are supported by some empirical evidence (Beine et al., 2008; Saxenian, 2002). Nevertheless, there are a few alternative perspectives that challenge the interpretation of high-skilled migration as a zero-sum game.

First, many emigrants remain connected to their countries of origin and contribute to their development through remittances and interna-tional trade (De Haas, 2005; Martinez et al., 2015). They are therefore an important source of income and contributor to development, savings, and private investment. At the same time, the tendency of immigrant entrepre-neurs to engage in trade relationships with their country of origin also con-tributes to its economic development (Fairlie and Lofstrom, 2015). Second, some authors have argued that the “brain drain” of highly skilled talent has become a “brain circulation”, at least for some countries (De Haas, 2005; Saxenian, 2002; 2005; Solimano, 2008; Wadhwa, 2009; Zweig and Wang, 2013). As Wadhwa (2009) and Zweig and Wang (2013) note, around the time of the 2008 financial crisis, many immigrant entrepreneurs in the United States returned to their countries of origin, e.g., China and India. Upon return, migrants often contribute to the economic development of the country of origin through entrepreneurship and investment (Sax-enian, 2005; Wadhwa, 2009; Demurger and Xu, 2011). Third, migration should not be understood solely as a vehicle for transporting entrepre-neurial talent between countries. Instead, migration itself can also help nurture entrepreneurial abilities by building cognitive skills and more diverse international social networks, and by introducing immigrants to



new business ideas and market needs (Leung and Maddux, 2008; Vandor and Franke, 2016).

Thus, there is reason to believe that increased international migration may not only lead to a geographical redistribution of entrepreneurs, but also result in an overall gain in entrepreneurial activity. This suggests that public money may be better spent on building business incubators for im-migrant entrepreneurs than on building border walls.



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